SiliconBeat

Earlier this month, the board of directors for entertainment software developer Electronic Arts adopted what it called a “Key Employee Continuity Plan,” which seems to guarantee the continuity of compensation for key employees prior to and after some “change in control” event, say a take-over, hostile or otherwise.

No surprise, of course, that it names only executive-level employees who might lose their job “without cause” within two months before such an event, or for up to a year after such an event, even if the executive quits for “good cause.”

The executives are classified into four “tiers:” tier 1 is really just numero uno, the
chief executive; tier 2 includes presidents, executive vice presidents and the chief financial officer; tier 3 is made up of senior vice presidents; and tier 4 includes vice presidents.

As usual, them that gots the most gets the most. The tiers kick-in when lump sum severance payments are calculated by taking a year’s worth of salary and bonus and multiplying it by a pre-ordained factor: with tier 1 and 2 executives getting 1.5 times salary and bonus, tier 3 executives getting 1 times salary and bonus, and tier 4 executives getting half a year’s salary and bonus.

The compensation caste system even works its way down to any medical payments paid in the wake of terminations, with tier 1 and 2 employees getting eighteen months of health care benefits paid for, while tier 3 employees would get 12 months and tier 4 employees six months worth.

This is compensation designed by executives for executives. What sense does this make, business or otherwise? Surely, the highest paid executives at the company are the employees who would be most able to afford paying their health care premiums after losing their jobs, right?